We identified the earliest events in autophosphorylation of the insulin receptor after insulin addition. Insulin-stimulated autophosphorylation at specific sites in the tyrosine kinase domain of the receptor's beta-subunit is correlated kinetically with activation of kinase-catalyzed phosphorylation of a model substrate (reduced and carboxyamidomethylated lysozyme; RCAM-lysozyme). To identify these sites, the deduced amino acid sequence of the 3T3-L1 adipocyte insulin receptor of the mouse was determined. Insulin-induced activation of substrate phosphorylation was shown to require autophosphorylation of three neighboring tyrosines (Tyr1148, Tyr1152, and Tyr1153) in the mouse receptor. A search for cellular substrates of the receptor kinase revealed that insulin causes accumulation of a 15,000-Mr phosphorylated (on tyrosine) cytosolic protein (pp15) in 3T3-L1 adipocytes treated with oxophenylarsine (PAO). PAO blocks turnover of the phosphoryl group of pp15, causing its accumulation, and thereby appears to interrupt signal transmission from the receptor to the glucose-transport system. Two membrane-bound protein phosphotyrosine phosphatases that are inhibited by PAO and are apparently responsible for the turnover of the pp15 phosphoryl group have been purified from 3T3-L1 adipocytes and characterized. These and other results support the hypothesis that turnover of the phosphoryl group of pp15, a product of insulin-receptor tyrosine kinase action, couples signal transmission to the glucose-transport system. [32P]pp15 was purified to homogeneity from 3T3-L1 adipocytes. Amino acid and radiochemical sequence analysis of the purified tryptic [32P]phosphopeptide revealed that pp15 is the phosphorylation product of 422(aP2) protein, a 15,000-Mr adipocyte protein whose cDNA we previously cloned and sequenced. 422(aP2) protein was found to bind fatty acids. When exposed to a free fatty acid, notably oleic acid, 422(aP2) protein becomes an excellent substrate of the isolated insulin-receptor tyrosine kinase. Compelling evidence indicates that on binding fatty acid, 422(aP2) protein undergoes a conformational change whereby Tyr19 becomes accessible to the receptor tyrosine kinase and undergoes O-phosphorylation. Adipose tissue and skeletal and heart muscle, which exhibit insulin-stimulated glucose uptake, express a specific insulin-responsive glucose transporter. A cDNA (GT2) that encodes this protein was isolated from a mouse 3T3-L1 adipocyte library and sequenced. We also isolated and characterized the corresponding mouse gene GLUT4. DNase I footprinting with nuclear extracts from 3T3-L1 cells revealed that a differentiation-specific nuclear factor binds to the GLUT4 promoter. The purified transcription factor C/EBP binds at the same position.(ABSTRACT TRUNCATED AT 400 WORDS)